Before Buying a Home
Home prices in most parts of the country are just about as affordable as they are likely to get, and mortgage rates remain super low. Together, those factors mean that many people are thinking about buying a home. Some will be first-time homebuyers, while others will be “boomerang” buyers who lost their homes in the housing meltdown but are now hoping to get back in. Still others may see this as the best time to upgrade to a larger home, downsize to a smaller one, or to move to the retirement locale of their dreams.
Whatever your motivation for buying a home, unless you are going to pay cash for the property, there’s one essential step you must take first: get preapproved for a loan.
The reason? Your lender will help determine what type of home loan financing you can get, and the interest rate you’ll pay. You’ll want to have plenty of time to dispute credit report errors if you find any, and get them fixed. The last thing you want is to find out at the last minute that you can’t buy your dream home because of something on your credit report that shouldn’t be there.
If you will be buying and financing a home with someone else — a partner or spouse, for example — you’ll each want to get your credit reports and scores. Get them from all three major credit reporting agencies; Equifax, Experian and TransUnion, as they each collect their own data and don’t share corrections with each other. You can do this for free once annually at AnnualCreditReport.com.
You’re Not Just a Number
The three-digit number that represents your credit score will be important when it comes to buying and financing a home. A difference of a few points could make a difference in the rate you’ll pay for your mortgage. Mortgage lender, Bob Brenner will typically use the middle of the three credit scores to determine the rate/program for which you qualify.
But that doesn’t mean you need to obsess about your score. Doing so can cause you unnecessary grief. After all:
If focusing on the number that represents your credit score isn’t the most important thing, then what is? Understanding the elements that make up your scores can be much more important. Our Credit Report Card, for example, assigns a grade to each of the main factors that go into a score:
What Can Your Score Do For You?
When it comes to buying a home, your credit scores can help you secure the financing you need to buy the property and pay it off over time. Your credit scores are a tool to help you achieve your personal and financial goals. If you can get the loan you need with the credit scores you have, then be satisfied with that — even if you don’t have the best score your loan officer has seen!
And finally, it’s important to put your scores in context. Mortgage lenders will look at other factors, like your debt-to-income ratios, employment history, and down payment. As any loan officer can tell you, even a perfect score can’t get you a loan if — for example — the appraisal comes in too low, or if you can’t document your income.
Gerri Detweiler Credit.com's Personal Finance Expert
Contact Tami Winbury Keller Williams Realty 805-798-3412 DRE#01878369 today for help in your search to purchase a home and all your real estate needs.
Whatever your motivation for buying a home, unless you are going to pay cash for the property, there’s one essential step you must take first: get preapproved for a loan.
The reason? Your lender will help determine what type of home loan financing you can get, and the interest rate you’ll pay. You’ll want to have plenty of time to dispute credit report errors if you find any, and get them fixed. The last thing you want is to find out at the last minute that you can’t buy your dream home because of something on your credit report that shouldn’t be there.
If you will be buying and financing a home with someone else — a partner or spouse, for example — you’ll each want to get your credit reports and scores. Get them from all three major credit reporting agencies; Equifax, Experian and TransUnion, as they each collect their own data and don’t share corrections with each other. You can do this for free once annually at AnnualCreditReport.com.
You’re Not Just a Number
The three-digit number that represents your credit score will be important when it comes to buying and financing a home. A difference of a few points could make a difference in the rate you’ll pay for your mortgage. Mortgage lender, Bob Brenner will typically use the middle of the three credit scores to determine the rate/program for which you qualify.
But that doesn’t mean you need to obsess about your score. Doing so can cause you unnecessary grief. After all:
- Trying to tweak your scores based on what you think may help improve them can sometimes have the opposite effect.
- There are many different loan programs with different credit score requirements. Loan officer, Bob Brenner will help you shop around to find the right program to meet your needs.
If focusing on the number that represents your credit score isn’t the most important thing, then what is? Understanding the elements that make up your scores can be much more important. Our Credit Report Card, for example, assigns a grade to each of the main factors that go into a score:
- Payment History
- Debt Usage
- Credit Age
- Account Mix
- Inquiries
What Can Your Score Do For You?
When it comes to buying a home, your credit scores can help you secure the financing you need to buy the property and pay it off over time. Your credit scores are a tool to help you achieve your personal and financial goals. If you can get the loan you need with the credit scores you have, then be satisfied with that — even if you don’t have the best score your loan officer has seen!
And finally, it’s important to put your scores in context. Mortgage lenders will look at other factors, like your debt-to-income ratios, employment history, and down payment. As any loan officer can tell you, even a perfect score can’t get you a loan if — for example — the appraisal comes in too low, or if you can’t document your income.
Gerri Detweiler Credit.com's Personal Finance Expert
Contact Tami Winbury Keller Williams Realty 805-798-3412 DRE#01878369 today for help in your search to purchase a home and all your real estate needs.
